The Shyft Group Inc

The Shyft Group, Inc. (NASDAQ: SHYF) is engaged in specialty vehicle manufacturing and assembly for the commercial vehicle. The Company provides last-mile delivery, specialty service and vocation-specific upfit segments, as well as it serves recreational vehicle industries. The Company’s reportable segments include Fleet Vehicles and Services (FVS) and Specialty Vehicles (SV).

Recent Financial and Business Updates:

• First Quarter 2023 Highlights:
• Revenue increased by USD 36.5 million, or 17.7%, to USD 243.4 million from USD 206.9 million in Q1 2022.
• Net income was USD 1.7 million, or USD 0.05 per share, compared to a loss of USD 3.9 million, or loss of USD 0.11 per share, in Q1 2022.
• Adjusted EBITDA reached USD 10.8 million, or 4.4% of sales, a significant improvement from a loss of USD 0.6 million, or 0.3% of sales, with an inclusion of USD 8.5 million in EV development costs versus USD 4.4 million in the previous year.
• Adjusted net income amounted to USD 4.3 million, or USD 0.12 per share, compared to an adjusted net loss of USD 2.1 million, or loss of USD 0.06 per share, in the prior year.
• Consolidated backlog as of March 31, 2023, stood at USD 667.4 million, down 47.6% from USD 1.3 billion as of March 31, 2022, reflecting a return to normalized levels.
• Operating cash flow improved to USD 5.9 million, a USD 33.7 million increase compared to an outflow of USD 27.8 million in Q1 2022.
• Blue Arc™ EV Solutions achieved certifications from CARB and EPA for its Class 3, 4, and 5 all-electric delivery vehicles, with the Class 3 EV achieving a remarkable 225-mile city driving range, surpassing fleet customer requirements.
• First Quarter 2023 Business Segment Highlights:
• Fleet Vehicles and Services (FVS):
  • Sales increased by USD 46.7 million, or 41.5%, to USD 159.4 million from USD 112.7 million in Q1 2022, driven by enhanced chassis supply and growth in truck body due to expansion efforts from the previous year.
  • Adjusted EBITDA rose to USD 12.5 million, or 7.8% of sales, a significant improvement from a loss of USD 0.9 million, or 0.8% of sales.
  • Segment backlog amounted to USD 584.9 million as of March 31, 2023, down 49.1% compared to USD 1.1 billion as of March 31, 2022, influenced by production enhancements.
  • Contracts were awarded to upfit 18,500 vehicles for commercial off-the-shelf (COTS) use with production set to begin in mid-2023.
• Specialty Vehicles (SV):
• Sales declined by USD 7.0 million, or 7.4%, to USD 87.2 million from USD 94.2 million in the previous year due to weaker motorhome chassis demand, offset by strength in service bodies.
• Adjusted EBITDA increased to USD 13.9 million, or 15.9% of sales, up from USD 10.1 million, or 10.7% of sales.
• Segment backlog was USD 82.5 million as of March 31, 2023, down 33.5% compared to USD 124.0 million as of March 31, 2022, primarily driven by softness in motorhome chassis.
• Tennessee operations were established to support the growing service body, police car upfit, and accessory business, providing access to new chassis pools and expanded dealer sales and support.

Technical Observation (on the daily chart)

The price of SHYF stock has shown a consistent downward trend after making 52-week high on February 02, 2023, and correcting around 37.26%. Currently, the stock is near an important support zone of USD 18.00-USD 20.00, from where price has taken support in the past. A breakout in upward direction from the range of USD 22.00-USD 24.00, would likely initiate a new short-term trend in the up direction with targets of USD 26.00-USD 28.00 levels. The RSI (14 period) momentum indicator is at a value of 45.91, with expectations of some consolidation or a short-term upside momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to The Shyft Group, Inc. (NASDAQ: SHYF) at the current price of USD 21.41 as of July 19, 2023, at 10:30 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 19, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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